Sample Economics Paper on Competition in Healthcare Industry

Q1. A competitive market is one in which many producers compete with each other in meeting the needs of many consumers. Producers and consumers in a competitive market do not dictate how the market operates nor control the price of services and goods independently (Goddard, 2015). In case of a perfect market which exhibits certain characteristics like provision of perfect knowledge, no barriers to entry or exit the market, and no government regulation; buyers and sellers will receive best possible outcomes as predicted by the perfect market theory.

Q2. Healthcare Industry is not a competitive market because as opposed to perfect competitive market, it is characterized by imperfections such as inability by buyers to determine the quality of the service, independent healthcare provider can determine the price of a service offered, and its operations are mainly regulated by the government (Goddard, 2015). These characteristics limit healthcare providers and service seekers from achieving desired outcomes.       Advocate Aurora Health Care is one example of the mergers between healthcare providers formed in 2018. The partnership between Aurora Health Care and Advocate Health Care aims at ensuring patients’ confidentiality and privacy (Aurora Health Care, 2019). Additionally, Advocate Aurora Health Care intends to reduce the costs and offer additional care services.

Q3. The decisions on acquisitions are mainly influenced by financial challenges faced by independent healthcare providers. Merging and acquisition will help providers in achieving efficiency, sustainability and cost control in the market.

Q4. The role of the government in regulating mergers and acquisition is to allow market forces function effectively by reinforcing rules like review of proposed mergers. Appropriate regulations on acquisitions will foster quality care and lower costs in present merged providers compared to previous consolidation that depicted lower quality and higher prices.


Goddard M.( 2015). Competition in Healthcare: Good, Bad or Ugly? International Journal of Health Policy Management. Retrieved from

Aurora Health Care (2019). News Media Resources. Aurora Health Care. Retrieved from